Pushing power down

This article was first published on Progress Labour on 17 April 2014.

Four years on, that looks like so much posturing. The government’s school reforms have concentrated control in the Department for Education, while its work programme is a dysfunctional product of Whitehall silo thinking and the burden of deficit reduction has fallen heavily on local government.

Some of the most notable examples are found in the Department for Business, Innovation and Skills. For example, by axing government regional offices, the coalition cut the proportion of BIS staff based outside London from 16 per cent to just six per cent. It has largely ignored Lord Heseltine’s arguments for a radical decentralisation of business and growth support. Of the £49bn single pot combining funding streams that he proposed in his ‘No stone unturned’ report, the government has committed to devolving just £2bn of annual spending.

Such policies are in defiance of evidence from countries where regions and cities have more autonomy from the centre than their British equivalents. This week, I am visiting the United States to see, among other things, how American mayors and governors use their devolved powers to drive innovation and prosperity. A major study completed in 2012 found that ‘countries with greater degrees of decentralisation are associated with stronger economic performance.’ There are lessons here for us Brits, the United Kingdom being one of the most centralised countries in the advanced world.

Consider the record of Rahm Emanuel. As mayor of Chicago, he has pinpointed his city’s strengths as a rival high-tech hub to those on the Atlantic and Pacific coasts. He has set up a now world-renowned incubator for startups, has toured America’s top universities to lure engineers and IT experts to his city and he has made Chicago the first urban school district in the United States to make computer science part of the core curriculum.

Ed Lee, Emanuel’s counterpart in San Francisco, declares his city the ‘innovation capital of the world’ and has geared his business development policies accordingly – for example, mapping skills shortages with employers and feeding these insights into schemes to adapt the workforce to the fast-changing needs of the city’s economy.

Across the country in Maryland, Martin O’Malley is showing similar creativity and drive as governor. He has led the way in using open data policies to make public services more responsive to the needs of their users.

Another American trend that we should study closely is the way that mayors and governors collaborate – often across geographic and political boundaries, and independently of the federal government – to devise new solutions to common problems. Last June, for example, the United States Conference Of Mayors approved a resolution – co-sponsored by Emanuel and Lee, among others – to remove regulations holding back the ‘sharing economy’: bike-and-car-sharing schemes, peer-to-peer service industries, cooperatives and the like.

These and many other such examples highlight the benefits of pushing down power to regions, cities and businesses that are, ultimately, the best judges of their own needs. That is why Ed Miliband recently announced that Labour will go much further than the Tory-led government by devolving at least double the amount that minsters are planning – the equivalent of at least £20bn over five years.

It is also why I am making devolution a central part of Agenda 2030, our plan to tackle the cost-of-living crisis through better-balanced, sustainable growth and a higher-skill, higher-wage economy.